Tonight, enterprise software maker TIBCO Software (NASDAQ:TIBX) reports earnings for the Q3 2006 fiscal period ended Aug. 31. Let's have a look at what we know today.

What analysts say:

  • Buy, sell, or waffle? Seventeen analysts currently follow TIBCO, with eight rating the stock a buy and the other nine holding instead.
  • Revenues. The average analyst estimate calls for $121.1 million, up from $106 million in the year-ago quarter, a 14.3% improvement.
  • Earnings. Wall Street expects a net profit of $0.06 per share, up from $0.05 per share last year.

What management says:
Ram Menon, TIBCO's executive vice president of marketing and strategy, recently said, "TIBCO's customers are truly progressive in terms of embracing novel software and solutions to evade unwelcome surprises and better serve end users to achieve a competitive advantage." It should say something about TIBCO's market position when senior executives go out of their way to mention how different and progressive its customers are -- TIBCO's software routinely wins quality awards, but the company remains a small fry beside competitors like BEA Systems (NASDAQ:BEAS), Oracle (NASDAQ:ORCL), or SAP (NYSE:SAP).

What management does:
Gross and operational margins seems to have turned north after a protracted downward slide, while net margins have done the opposite. That dichotomy is mostly a tax effect, as net interest income has remained upward-bound.

Margins %

2/05

5/05

8/05

2/06

5/06

8/06

Gross

75.0

73.2

72.4

72.1

71.7

72.9

Op.

18.4

15.4

13.9

13.9

12.3

15.2

Net

11.2

13.5

14.7

16.3

14.9

14.8
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
TIBCO is resting pretty much its entire business model on the market acceptance of service-oriented architecture (SOA) software, where it is a pioneer and among the market leaders. But as Mr. Menon's comment above shows, making the leap to SOA requires some outside-the-box thinking.

Not that the competition isn't glancing in the same direction. Recall the recent media fight between Oracle and SAP? Part of that was over differing interpretations of each others' SOA plans, and both companies are definitely moving in that direction. Maybe SOA will be SOP (standard operating procedure) in a few years, if current trends continue, and in that case TIBCO should be well placed to profit from that market shift. For now, expect relatively calm seas as the company reports on a seasonally slow summer quarter, but keep an eye on TIBCO as SOA acceptance materializes over time -- or not.

Competitors:

  • Oracle
  • SAP
  • Adobe Systems (NASDAQ:ADBE)
  • Microsoft (NASDAQ:MSFT)
  • IBM (NYSE:IBM)
  • DST Systems (NYSE:DST)

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like. Microsoft is an Inside Value selection. Foolishdisclosureis always one step ahead.